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Americans don’t have enough stock market



Americans are all on the stock market.

As major indexes climb to new highs, individual investors hold more stocks than ever before. They also increase their bets by borrowing to expand their bets, or increase their purchases when the market declines slightly.

In April, the shareholding of American households increased to 41% of their total financial assets, the highest level on record. According to data from JPMorgan Chase & Co. and the Federal Reserve (Federal Reserve) dating back to 1952, the data includes 401(k) retirement accounts. Nikolaos Panigirtzoglou of JPMorgan analyzed the data and attributed the increase in allocations to rising stock prices and stock purchases.

As market volatility continues to decrease, the Standard & Poor̵

7;s 500 Index has set 25 records this year, which is where the enthusiasm of the stock market lies. At the same time, stimulus checks have contributed to a record increase in household income, increased spending and helped promote economic recovery.

In the following week, monthly work reports and earnings results of companies such as Uber Technologies the company

Will provide clues about the strength of recovery.

Millions of new brokerage accounts were created during the Covid-19 pandemic, and some investors who have tried stock or options trading for the first time in the past year have been lingering, which has increased their investment. Financial advisers and financial planners said that the past year has witnessed a strong rebound, and the stocks held by their clients have become more comfortable. Some even questioned why their investment portfolios need bonds while yields are still low.

A steadily rising market-recently boosted by impressive earnings from companies such as Facebook the company

And letters the company

—Attracted more investors.Bank of America’s retail customers the company

The bank’s analysts said in a report on April 27 that the bank has bought stocks for nine consecutive weeks, while hedge funds and other large investors have recently fled the stock market.

Damon White is a 44-year-old physician assistant based in Sewell, New Jersey. He said that when he was resigned last year, he began to learn about stocks and options through social media platforms such as TikTok.

Damon White recently invested money in stocks such as Tesla and American Airlines.


photo:

Damon White

He returned to work, but said that he still checks his investments frequently, and has recently invested thousands of investments in the market, especially in stocks such as Apple and Tesla. the company

American Airlines Group the company

Makes his total holdings more than 400,000 US dollars.

White said: “When you put in a lot of money, it’s really puzzling.” But, “If you have a quick finger, then you will sell…in the long run, you will lose.”

He does not have any bonds and plans to continue to invest his money in stocks.

Many individual investors have not been intimidated by the downturn in the stock market. Data from research firm Vanda Research shows that when the Standard & Poor’s 500 Index fell 1% that day, individual investors tend to buy more stocks than the same number of stocks; during the pandemic, their determination to buy during the sell-off was also gained.了Enhancement. Some people even borrowed to expand their bets on the stock market.

David Sadkin, a partner of Bel Air Investment Advisors, who oversees wealthy clients of $4.6 billion, said that their share of funds sitting on the stock market has increased from about 45% last year to about 65%. He cut back on investment in bonds. As the bond holdings matured, he gradually reinvested the money in stocks.

On Friday, the yield on the 10-year U.S. Treasury bond rose to 1.632% from about 0.915% at the beginning of the year, but it was still at a historical low.

Sarkin said: “In order to achieve customer goals, we need to take greater risks.” “We intend to continue to redistribute interest rates to risky assets when interest rates remain at such low levels.”

Other investors are more aggressive. According to a survey conducted by the American Association of Individual Investors, investors’ allocation of the stock market in March reached 70%, the highest level in three years. According to data from the Financial Industry Regulatory Authority, as of March, margin debt or the funds used by investors to purchase securities reached record levels.

Randy Lee, 31, a software engineer in Lansing, Michigan, said that at first he was very fascinated by options trading and witnessed his small investment roughly doubled in a few hours. three times.

Now, he says he still trades in the options market, but still holds “boring” stocks such as Royal Caribbean Group and Kraft Heinz the company

Randy Lee said he doubled his retirement account contributions.


photo:

Randy Lee

Due to the uncertainty of the pandemic, he also began to save more money in his retirement account. He doubled his contributions to the account every two weeks and opened a Roth IRA account, which he added to the account in recent weeks. Most of his shares are in the stock market.

Mr. Li said: “I have never had so much time to sit at home and watch these things.” “Like everyone else, it is a better place to make money than to start playing stocks.”

Share your opinion

During this stock market frenzy, how has your strategy changed (if any)? Join the conversation below.

He is optimistic about stocks, especially after seeing the tech giant report record profits last week. But he did worry about the future market collapse and bought some cryptocurrencies, which he believed was a hedge against the downturn.

He is not alone. The rise in prices from lumber to Dogecoin to stocks has caused people to worry about market bubbles. For some analysts, the stock market boom is sending warning signs.

“In the past year, retail investors have made a lot of money in many areas, including stocks. At some point, given how high their equity allocation is, the risk they face is that they decide to exit and make a profit .” said Mr. Panigirtzoglou, managing director of JPMorgan Chase. “This actually happened before 2000.”

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com

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